Buying a term insurance plan is one of the simplest ways to get your family’s financial future secured and prepare them for your absence. Term life insurance benefits range from its cost-effectiveness to bringing a secure future for your family, among other things. More and more people in India are opting for a life cover and term insurance is emerging as one of the popular choices, and for good reasons.
If you have ever wondered what term insurance has to offer, here are 11 benefits of term insurance that may help you understand the plan better.
1. Life Cover
One of the most obvious benefits of term insurance, as with any life insurance, is the life cover aspect. One seldom grasps the significance of having such a source of financial support, unless they face a certain loss. The life cover offered by a term insurance plan is a way to get financial support for your loved ones, so the grief of your absence may hit them a tad more softly.
2. Uncomplicated Design
Not everyone is savvy with jargon when it comes to matters of money. But that does not mean they have to miss out on the options that provide them with financial security. One of the key benefits of term insurance is its simple design that can be fathomed by most people. The plan is structured in a way that it can be perceived as no-frills, and this can be a factor that customers consider when making such important decisions.
3. Cost-effective Structure
Since this plan is no-frills, which means it does away with all the unnecessary features and retains life insurance as a key benefit, it tends to be relatively more cost-effective as compared to its counterparts. Hence, you can get a significant sum assured amount at a reasonable premium. This term life insurance benefit is one of the reasons why it is an easy choice for many.
4. Accessibility
There are three key aspects of term life insurance plans that make them accessible – price, ease of purchase, and simplicity. Let’s break this down.
The simple structure and low price of these plans, which are significant benefits by themselves, are interconnected. To some extent, they make each other possible. Besides this, a key term life insurance benefit is that it can be purchased online as well as offline, in a few simple steps.
All these factors make term life insurance plans accessible to an array of demographics, including people in remote areas, people who are economically challenged, individuals with are not tech-savvy, and more.
5. Scope to Customise
Term insurance benefits are not limited to their core design. A key advantage you may notice when opting for term life plans is that the scope of what your policy offers can be enhanced by adding riders to your policy or choosing a term plan type that is more suitable to you.
Riders are add-on features for your term life insurance plan. Their availability may vary across insurance providers. Some of the common term insurance riders are:
Most of these riders can be added to any type of term plan you may purchase, subject to availability. Here are some of the plan types available in India.
Level term insurance plan
Term insurance with return of premium
Increasing term insurance
Decreasing term insurance
Convertible term insurance
6. Tax Exemptions**
If you are a taxpayer under the old tax regime, you may be able to claim an exemption for the premiums paid into the term insurance plan. You may consult your tax advisor or a financial expert to understand how you may fit this into your tax deductions.
Furthermore, the benefits received from your term plan may also be eligible for tax exemptions. So, as per prevalent tax laws, the beneficiary of the policy who receives the benefit may be able to claim an exemption. This allows you as well as the beneficiary to rest easy about their financial obligations and focus on building stability.
7. Premium Payment Options
While it may not seem like a significant benefit of term insurance at the first glance, having multiple payment options for your premium can help you stay on track when it comes to keeping your policy in force. Loss of this life cover through policy lapse due to non-payment of premiums can lead to not only financial issues for your dependents in the future, but it may also lead to loss of the premiums you may have paid thus far.
Usually, the payment options available for term life insurance plans are monthly, quarterly, or annually. You can also opt for a single premium payment option for your term insurance plan. These options may vary based on the plans chosen. It is advisable to check the policy brochure to know what options are available with your plan. You may also use a term insurance calculator to get premium estimates for the sum assured selected, according to the payment frequency chosen.
8. Easy to Purchase & Maintain
Today, term life insurance plans are easily available online as well as offline. Except for a health check-up, which is mandated on a case-by-case basis for prospective policyholders, the purchase process for these policies is relatively hassle-free, be it online or offline.
When buying these online, the process can be completed in a few steps, provided you have the right documents ready at hand, and can make the payment. On the other hand, when buying these policies offline, you may complete the process yourself or seek the assistance of an insurance agent.
Since these policies are not market-linked, you do not have to worry about maintaining them. The only action you may require on your end is regular premium payments and updating policyholder and nominee details as and when necessary.
9. Flexible Duration
Term insurance plans offer coverage for anywhere between a duration of five years to forty years. This allows you to utilise this plan as a life cover for the long run until you have fulfilled some of your key responsibilities. On the other hand, you may also use this plan as a short-term cover to support your liabilities, such as a personal loan or a car loan, so your dependents would not have to deal with the burden.
10. Lesser Worries About the Future
The uncertainties of the future are what one ought to stay prepared for, even though one may hope and plan for the best. While it may be almost impossible to fulfil the loss of a person from your life, it is easier than you think to alleviate the financial burden they may leave behind in their wake. One of the most significant benefits that term insurance offers is that it may allow you to worry less about the financial future of your family.
11. Return of Premium Option
Despite all the benefits of term insurance that are available, a concern that prospective policyholders often have is that there are no maturity benefits to be earned from this policy. While this is true for level term insurance plans, you may opt for the return of premium option to get your premiums paid in return.
With these 11 benefits coupled with the easy availability of a range of term insurance options in the Indian market today, more consumers are educating themselves and opting for a life cover in this form. Before you buy a policy, ensure that you have taken your needs into consideration.
** Tax exemptions are as per applicable tax laws from time to time.
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